12% VAT Signed by Pres. Marcos on Foreign Digital Services Like Netflix, Amazon, Shein…
2 min read
MAY 04,2025
MANILA, Philippines — President Ferdinand “Bongbong” Marcos Jr. has signed a new law that imposes a 12% value-added tax (VAT) on foreign digital services, including popular platforms like Netflix, Disney+, Amazon, Temu, and Shein.
The newly approved Republic Act 112023 ensures that overseas-based digital companies offering services to Filipinos will now pay the same taxes local providers already shoulder.
💡 What the Law Means
The law amends the Tax Code to treat all digital services consumed in the Philippines as locally rendered—even when the provider is based abroad. This move creates fairer competition between local and international providers.
Lawmakers passed the measure to address what they saw as a tax loophole. Foreign platforms had been earning from the Philippine market without contributing to VAT collections, while local creators and businesses remained fully taxed.
“We need to support our resident creatives,” said Albay Representative Joey Salceda, a key advocate of the bill. “For years, they’ve paid taxes while global players operated here untaxed.”
12% VAT- Who Will Be Affected?
The law applies to all digital services delivered online, such as:
- Streaming platforms (Netflix, HBO, Disney+)
- E-commerce sites (Amazon, Temu, Shein)
- Cloud services
- Digital advertising
- Online marketplaces
- Search engines
- Digital goods and in-app purchases
These providers must now register with the BIR, report their sales, and pay the 12% VAT when serving Philippine customers.
🧾 How It Will Be Enforced
The Bureau of Internal Revenue (BIR) will enforce the law by monitoring digital platforms directly.
“Everything goes through the platforms,” said BIR Commissioner Romeo Lumagui. “They’re responsible for tracking and reporting their sellers.”
If a platform fails to comply, the BIR can block access to their site in the Philippines.
12% VAT- Expected Revenue and Support for Filipino Creatives
From 2024 to 2028, the government expects to collect ₱83.8 billion in VAT revenue. Lawmakers committed 5% of that amount to fund programs supporting local creative industries.
💰 Will Subscription Prices Go Up?
That depends on each platform. According to the BIR, companies can adjust prices, but they’re not required to do so.
“If they increase fees too much, they risk losing customers,” Lumagui explained. “Market forces will naturally control pricing.”
There will be no price caps, but the government believes competition will help regulate rates.
12% VAT-Critics Say It’s Anti-Consumer
Some lawmakers and consumer groups have criticized the law. Former Bayan Muna Rep. Carlos Zarate argued that this move will hit Filipino consumers harder than it punishes foreign firms.
“Big companies will pass the cost on,” Zarate warned. “Middle-class subscribers will feel the pinch.”
🌏 Regional Trend in Southeast Asia
Other countries in the region have already implemented similar taxes. Singapore, Malaysia, Indonesia, and Thailand all introduced VAT or digital tax laws between 2020 and 2021.NOWTREND
RELATED STORY: Digital Nomad Visa Now Available in the Philippines
About The Author
